India- Nepal Relations

• As close neighbours, India and Nepal share unique ties of friendship and cooperation characterized by an open border and deep-rooted people-to-people contacts of kinship and culture.
• There has been a long tradition of free movement of people across the border.
• Nepal shares a border of over 1850 km with five Indian states – Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand.
• The India-Nepal Treaty of Peace and Friendship of 1950 forms the bedrock of the special relations that exist between India and Nepal.

India-Nepal Friendship Treaty

It provides for-

• An open border between the two countries
• Allows Nepali nationals to work in India without a work permit,
• to apply for government jobs and the civil services (except for the IFS, IAS, and IPS)
• To open bank accounts and buy property.
• India had waived its rights under reciprocity as a sign of goodwill.
• Nepalese citizens avail facilities and opportunities on par with Indian citizens in accordance with the provisions of the Treaty.
• Nearly 6 million Nepalese citizens live and work in India.
• High Level exchanges: Apart from high level visits the two countries cooperate through forums such as SAARC, BIMSTEC etc. and through bilateral institutional dialogue mechanisms like India-Nepal Joint Commission.
• Humanitarian Assistance and Disaster relief: India dispatched National Disaster Response Force (NDRF) teams, rescue and relief materials and extended New Line of Credit agreement for US$ 750mn for post-earthquake reconstruction projects in Nepal.
• Economic:
• Since 1996, Nepal’s exports to India have grown more than eleven times and bilateral trade more than seven times.
• Also, there are about 150 Indian ventures operating in Nepal in manufacturing, services (banking, insurance, dry port, education and telecom), power sector and tourism industries.
• Water Resources:
• Around 250 small and large rivers flow from Nepal to India forming a part of the Ganges river basin which can become major sources of irrigation and power.
• A three–tier bilateral mechanism is working since 2008 relating to cooperation in water resources and hydropower.

India’s Development Assistance to Nepal

• Assistance to Nepal in development of border infrastructure through upgradation of roads in the Terai areas.
• Development of cross-border rail links
• Establishment of four Integrated Check Posts
• Lines of Credit for undertaking infrastructure development projects.

Defence Cooperation

• India has assisted Nepalese Army (NA) in its modernization through provision of equipment and training and cooperation in areas of disaster management.
• Further there is large scale presence of Gorkha soldiers in Indian army and both armies have been awarding honorary ranks of General to Army Chiefs of each other.

Education

• GOI provides around 3000 scholarships/seats annually to Nepali nationals.

Culture

• GOI promotes people-to-people contacts, organize cultural programmes, and conferences and seminars.
• India and Nepal have also signed three sister-city agreements for twinning of Kathmandu- Varanasi, Lumbini-Bodhgaya and Janakpur-Ayodhya.

Connectivity

• MOUs have been signed between both the governments for laying electric rail track linking Kathmandu with Raxaul in India.
• India is looking to develop the inland waterways for the movement of cargo, within the framework of trade and transit arrangements, providing additional access to sea for Nepal calling it linking Sagarmath (Mt. Everest) with Sagar (Indian Ocean).
• A 12-point regular joint statement, three special statements on agriculture, rail linkages up to Kathmandu, and inland waterways,

Power

• An Agreement on ‘Electric Power Trade, Cross-border Transmission Interconnection and Grid Connectivity’ between India and Nepal was signed on 21 October 2014.
• The Agreement is aimed at facilitating and further strengthening cross-border electricity transmission, grid connectivity and power trade between Nepal and India.
• It provides a framework for import by Nepal from India until it becomes power surplus and subsequent import by Indian entities from Nepal, on mutually acceptable terms and conditions (450MW).

Nepal passed its new Constitution in September 2015. Passage led to protest by Madhesis and Tharus because they claimed it to be discriminatory against them because:

• The federal boundaries were divided in a way to reduce people inhabiting Terai region to minority in each province.
• Parliamentary seats were disproportionately allocated. Terai region constituting 50% of population was allocated only 65 seats out of 165.
• Citizenship provisions discriminated against naturalized citizens and children born to Nepalese women - who were not granted citizenship through descent - in high Constitutional post like that of President, Prime Minister.
• In response Madhesis started protest under United Democratic Madhesi Front and even blocked India - Nepal border trading point at Birgunj across Friendship Bridge.
• This strained the India - Nepal relations as Nepal accused India of abating the protests and making life difficult for Nepal as supply of daily need items were blocked.
• Nepalese Parliament amended its Constitution but Madhesis rejected the amendments saying that it is 'incomplete' and does not completely fulfill the aspirations of Madhesis people.
• The amendment fulfilled the 2 key demands of proportional representation in government institutions and allocation of seats in Parliament in proportion to populations.
• The other demands related to redrawing of the federal boundaries and citizenship has not been addressed.

Challenges

• India held that new Nepalese constitution did not address the concerns of the people of the Terai and allegedly backed a blockade by Madhesis to cripple supplies to generate pressure on Nepal.
• Nepal wants to amend 1950 Treaty of Peace and Friendship which enjoins it to consult India before buying weapons or enter into any security relationship with a third country.
• There is a trust deficit in Nepal because of the India’s delay in implementation of various projects in Nepal more so vis-a-vis China and its implementation of agreed-upon projects.
• India holds that it won’t buy power from dams built by China (China’s Three Gorges Corporation was given a second dam project to build in Nepal recently) and Indian companies must be involved for this to happen.

China has proposed a new dialogue mechanism with Nepal that would also involve India during the visit of Nepal’s Prime Minister to China.

What is new 2+1 Dialogue mechanism?

• Two Plus One format for dialogue as proposed is different from a trilateral mechanism. Under the Chinese proposal, China and India can jointly conduct a dialogue with a third regional country i.e. it is not Nepal specific and can be applied to any other country in South Asia.

Potential Areas of Cooperation

• Although China is increasing economic cooperation with Nepal, India continues to remain Nepal’s largest trading and business partner.
• Further, India is the only transit country for Nepal’s third country trade despite having signed a transit agreement with China.
• Nepal needs massive developmental assistance for infrastructure development and also to implement federal provisions of new constitution through the creation of the necessary administrative infrastructure in the provincial capitals.
• Hydel Cooperation: Nepal’s installed hydel capacity of 700 MW is much lesser than potential of over 80,000 MW.
• Further considering 60% of the Ganga waters come from Nepal’s rivers and 80% of these flows take place in monsoon months, effective water management for both irrigation and power generation cannot be underemphasised.
• India also needs effective delivery on the pending projects, the remaining ICPs, the five railway connections, postal road network in the Terai and the petroleum pipeline so that connectivity is enhanced and ‘inclusive development and prosperity’ assumes reality.
• Border Dispute Kalapani Dispute and new Map – Diplomatic channels.
• 5 Editorials – 20th Edition; 28th Edition – Power Trade Issue